JJSF - Earnings call transcript Q3 2018

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Operator

Welcome to the J & J Snack Foods Third Quarter Earnings Conference Call. My name is Paulette and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] Please note the conference is being recorded.

call Gerry the turn I'll over Shreiber. to Now

may begin. You

Gerald Shreiber

statements and Thank the want forward-looking cause subject actual welcome those that to differ in and Paulette certain conference herein risks to begin The results pre-empt I could statements these everybody. you, statements. uncertainties are forward-looking with call. from to contained projected the

Fachner, undertake to reflect is publicly that as You which reflect President arise statements, our date. or on these President this of date the forward-looking Bob of and Senior are is Moore, our the is is after forward-looking statements our of quarter President who Food a the Alright, Net and charge cautioned Sales Personal to Vice Senior Service. Vice not to for remote place in our who X% today in is no hereof. Bob location these update is Pape, who months. Powell, on the We analysis sales increased revise undue only Bo phone of CFO President events sales; or obligation my reliance F-A-C-H-N-E-R, President Dennis Senior begin. Vice who Also nine Results circumstances With I'll our X% and me Law, management's Vice COO; operations. for group. Gerry and Assistant; Radano, ICEE of Dan

quarter & for was Bakery in X% in nine last acquired Labriola and the Hill which XXXX, acquired January an Valley XXXX from acquired Southeast the increased the located August sales in ICEE was X% approximately months. and XX-month distributor first June for Excluding which sales and XXXX, of

a $XX.X a earnings a increased the from a a ago. that's For million $X.XX year $XX.X $X.XX million our by X% share net to or share quarter,

a a increase share, the For a from $X.XX share XX% earnings $XX.X million million months, $XX.X of or ago. an year from our net or were $X.XX nine

service. and quarter. the X% Our million. amortization up that's for to the EBITDA and Valley Sales and Labriola, depreciation sales months. taxes, increased customers were before earnings Food service was for Without months for nine Hill XX $XXX.X X% interest, quarter food for X% the & the past

down sales & up were increased Sales Valley due pretzels Hill was of down were ices to cake sales quarter for up bakery up was XX%. food Frozen juices and primarily X%. sales service months. X% handhelds funnel down to Sales soft XX%. XX% of increase Our and bars increased XX%, X% of were and without and Labriola customers the XX% nine for Churros the

Labriola months. for nine nine only Hill Retail X% down for XX% bakery were X%. of Sales due bars Retail and up markets. of to sales grocery retail overall was funnel cake months of the pretzels, for ices and and increased of flat X% Sales juice frozen Churros and the soft and XXX% Valley increase super the Our sales handhelds lsales nine were XX%. sales products X% up & up for months. XX% quarter without to supermarkets. and up were and the were up supermarkets

without percentage sales juice year's quarter ICEE the related the quarter months. XX% the an was up distributor Beverage Blast was quarter year X% the nine Arctic the of X% in nine and year. million the last acquired fiscal months. for and the months and ICEE the X% and of Italian related quarter the year the continued base and year's product for months. X% in for and as and up and the nine basis gains a alone increased sales X% percentage the were the Soft ICEE and strong Puppie. and acquired three months. business. nine Consolidated. product ICEE, of nine third and were sales which in Frozen of period X% profit by nine X% for sales nine X% X% up and the X% sales others distributor. revenue this pretzel recovery A X% months; the up gain in insurance in in were include points. X% quarter the its Handheld XX.XX% Service sales without months quarter X% for last the beverage Slush X% in recorded XX.XX% sales X% Frozen Gross sales bars profit up down XXXX were and frozen the for issues were down $X.X XX XX% up on quarter for for for to X% in quarter and our months Gallon our ices and and last were gross for for beverages

The resulted specific above primarily and me ingredients this as to our freight And flow. XX and increases mentioned. between and the were a Total difference and and a profit previously a the product and the redemptions distribution significantly from ices Italian trade XX.X%. gross $X,XXX,XXX percentage in facilities products lower last year distribution particularly is a mix involving changes business higher with coupon million Operating to recall Let quarter last year's reasons. grocery up year. increase $X.X decrease XXXX. $XX,XXX,XXX lower successful LUIGI's and operating in in soft in sales half expense, costs. primarily XXX,XXX Operating supermarket in quarter income insurance decreased decrease of for and and accounts expense balance cost. in payroll of segments short $XX service higher distribution our compared the costs volume The insurance, in spending gain warehousing which operating in points food we percentage a our in because of from an sales due our basis in to we that, of higher pretzels year XX.X% was from connection recovery this just year, meaning increase from bakery for spending, expenses Capital the That Real due and last cash income segment of concentrated as retail in decreased income biscuit to of this January last million year. in for sold to it primarily and quarter, in repeat $X, benefit

Our of investment cash an from March increase $XX and million was was balance. million $XXX our balance securities

We a continue X.X%. to are look maturity for acquisitions investments of of as of yield a $XXX use million with cash. to corporate our bonds our in safe

continued invest projects one-time been A was shares have in be to new share quarter modestly dividend of our was a and a a Sales million up very quarter were of $XX were the our soft Bakery on in the to we've been through stock growth the $X.XX XXXX. Pretzel be this in our $XX Brauhaus XX% quarter strong products continue up theaters club July service increases future. Our Sales and year our restaurants in movie to pretzels back in cost sales strong paid encouraging. million warehouse and Other efficiencies have Board cash were customers' Directors spending have quarter, We declared capital of shortly for a customer for plant Handheld at commentary. as this base. and as now by for completed. of quarter. Churros warehouse although of spending bought the X% had strong business our because sales sales about XX% bar store and or share. particular million we year's growing and both sales estimate to the strong of stores. juice a manufacturing club Churros of Frozen of during sales quarter distribution sales as promotion not were We our several down in last of as a were $X.X and were for to new. food and loss a our existing ices X, $XXX.XX down few discontinued. because XX,XXX a and we

due quarter sales sales been while stores sales funnel down XX% were restaurant schools they this have to sales sales chains Overall been to chains, Although this to continue to cake restaurant modestly. to up strong to lower year, down have were grow, year. this

for of of PATCH the Ice business We're continues were this million. going beverage Frozen $XXX,XXX frozen Sales or trade strong quarter. But we a Service trade were ICEE licensed in quarter, segment as up in in primarily at growth. OUR X% because solid focused a were sales machine down was pretzel income $X.X supermarket KIDS its sales spending sales up our as X% quarter. Soft revenue the Pops. solid out was forward. modest our to quarter rolled a up spending. XX% reducing retail on line the for the product Operating increased were down sales in novelty X%

a or year consolidated income in the already was reasons million overall the $X.X down ago. from For mentioned, X% quarter

due this quarter to overall I'll a happy XX% year XX% We And the XXXX. fiscal XX% your fourth tax tax to expect and now income quarter for you basis, rate rates. forward to want tax your a thank interest. effective $X.XX an this going field I and to be On benefit continued for comments. we questions of XX% year to share lower of for an have of reported

Operator

the [Operator Please is go from Gallo. you. Thank We'll ahead. Michael Our question-and-answer now session. begin Instructions] question first

Gerald Shreiber

Michael. morning, Good

Michael Gallo

to good being to spoke going your morning. determined you improve Gerry margins Hi, forward.

trade not you've I then retail in channel. your in through although spending you reduced some the prepared mentioned and pricing think some put remarks

think to the pricing things on So combination will that start should you of of Thanks. we and elaborate I doing you'll to kind more that was that have costs initiatives you specifically wondering if distribution think you improve of margins the you inflection higher your other some when lapping margin. can start some where help or other and the of see you're

Gerald Shreiber

already are be retail my quickly and team we efficiently going particularly management Well pricing. and met with on sales acting we've to with forth in senior and

price a slow the the have there, years in all to little two been addition obvious we've been major year believe where for while should the well so had as reasons ass and the we've In increasing In benefits increases passing a some increases. we to all as back bit margin relationships. on or commodities, - in to be, past and kick the but are we focused customer good our all we on they maintaining getting and speak

Michael Gallo

And improving and in of update that been you the other consolidating other some just us have on initiatives other some logistically, the but of also could of sort initiatives cost operations. terms moving things around facilities

Gerald Shreiber

to costs would They in improve major probably on November, next projects December forward right benefit on first of Well schedule year, be cost. in several to which continuing plants we're quarter appear to the October, we of getting and be looking our beginning had these and

Michael Gallo

Thanks very much.

Gerald Shreiber

Thank you.

Operator

go Our Akshay. question from Please ahead. comes next

Akshay Jagdale

morning. Good

Gerald Shreiber

how Good Akshay, are you? morning

Akshay Jagdale

Good, how you doing?

Gerald Shreiber

comments seriously. we're I Yeah, on and right taking and read them very your you're

Akshay Jagdale

Thank you.

question with people yeah, the probably So start that have. lot of let's a

a slowed differently that the it side what pretty you I there? the of to little on results sequentially, doing are still margin bit food growth, relative better what sales doing. most companies such So solid have we the mean although are

initiatives that So us help taking are to internally just underway in time margin those a can different is from understand help P&L. going see your before through are what's what and it of to that you are why bit the the flow progress -

Gerald Shreiber

of both be the responsible last assistant Bob respect have Law doing of couple I have days. who care going and my Pape manufacturing on Bob we is confidence Well for comment here we're to take over my been on and what meeting pricing. and to to with key Gerry this

Robert Pape

earlier across implemented business sure price we with initiatives as make mentioned move have quickly Gerry as are have and forward to as those retail possible. that the We

Gerald Shreiber

And are when it? doing we

Robert Pape

the before first quarter. would time Our

Gerald Shreiber

quarter. first I - manufacturing as the Well now one think the done far effective and is Gerry, project as

Gerald Law

completed Yeah Jersey. the in and a New bunch of quarter in we've projects actually

another for the quarter first to have the we're point line have one Jersey moving where a manufacturing will effect. distribution good t We Texas on coming it appears it up New be in in of up, some will

us is with had and have but never pickups aggressive pipeline there, a pipeline of robust have we such the be get price to for is and different projects going group price. to have continue CI to we Our some we costs, to which reduce we've strong and

Gerald Shreiber

again. Gerry is This

we and time year comfortable, these to going have loss but so have getting got that or our we the the recapture that things of of margin completed so. at Although increase some least efficiently over on we're we bases past

Akshay Jagdale

the targeting cost should these don't And seems able you're of basis magnitude savings, some sort with, it do like of but is initiative but and on quantification because be other continuous lot you're or which be might to you're that the any are for what's for a annual companies I some that what uncomfortable new savings like to road A you magnitude improvement food been have an the a expect targeting? that it's those doing down the is something good. to may number while, there savings you give us of we of or order want ask -

Gerald Shreiber

was and happens bit October of to would we sometimes period. the will certainly that see that the little There on but there year, beginning quarter you were in December as an were this conclusion soft we're room was and annual a number number annual be we first targeting, improve next hopeful our annual number which at the that and

understand we're there that the and once in don't wrong slip a and while real we fall, get back business but a quickly. every in we we'll So up we

Akshay Jagdale

somewhat the right. mix, is Okay on related and question just, then

been a you any differently - mix while are how So driver, the including because of product negative on thinking mix now some obviously has for you right product a M&A. margin

that any might impact and so that about differently how and margin how So now are the we trajectory. if thinking

Gerald Shreiber

margins We sales than certainly to pricing improving are are our we're emphasis being which on do both to on on and closer it accomplished not. going increased and committed to costs, an

Akshay Jagdale

market turnarounds with Okay something be so any company's there. Have very be right. and and not cycle? more but turnaround, on public you that's a at spending market you things but last one the that considered okay may the might disciplined, one not little updates of bit buying know I obviously life this you're M&A, I come buying stage in, mean a are evaluations,

Gerald Shreiber

things, we're and thrown consider We mean. to but I that sometimes of around we disciplined fundamentally done we Certainly at don't them anything base do third, the different still we've we but you be have, and from all past. committed what home, not we've if want look in first to than accomplished the what is know what out

Akshay Jagdale

Thank pass you. I'll on. it, Got it

Operator

question Jon from Anderson. ahead. next Our Please go comes

Gerald Shreiber

Good morning, Jon.

Jon Anderson

Good morning Gerry? everybody. How are you

Gerald Shreiber

you. I'm Good, thank good

Jon Anderson

whether way parts I Good about and up of there's little business you're and to after if question when in to guess seen you going of talk on first we my about should think the think magnitude pricing bit quantifying P&L. the any pricing where the necessary a here. willing is more show more is you're pricing start to that and

Gerald Shreiber

Jon. Sure

need And nods the I in our back had Am years. Gerry and that process particularly the market maintain way grocery we past and and our share, of is here increases - in both we of two supermarket, pricing from we're the get in well that need where no heads the to disciplined at we margin Law who're in retail we've Bo a within recognize looking Some changing now I that we involved in making got two this. right here? but

Gerald Law

Yes.

Jon Anderson

'XX And if opposed of balance expect and the side the benefit these are fiscal there service is that business also we current of pricing food as the the to things year. to on

Gerald Shreiber

of fiscal coming fiscal want you which the is you this should it balance October. in Well, see for current expect the which 'XX, begins year, but 'XX,

Jon Anderson

put sequential I a - some then it's actually to said even acceleration sales quarter, quarters And - you great. bit think three, Okay, X% little about this organic. the really sequential been last four your with have good of

you single about talk are where your next specific maybe where lot we to space on opportunities As the mid what line if see is so for have thinking the your excess as you most is business most it of grower. or be it's you opportunities, frankly top opportunity the over if business companies. should some forward, rate a space, to the it digit could still you about mean - there's I top channels and mean white where examples biggest a year white in continue better line you of categories product grow food I is look

Gerald Shreiber

a as would value plus digit accretive Well, we're taking we then from don't single mid and space whatever line top the Bob, it why on white But Pape get acquisitions. you certainly Bob that. about comment,

Robert Pape

in. have a as grow the some still growth channels our innovation room have that we Yeah, far and potential product we to of of lot retail as

convenient channels, chain areas our all moving our national food ample there's of still we feel restaurant certainly see And amount along are we On count potential. channels, then those forward. of the opportunity huge the our have that where we side business, store areas service healthcare a where lines our are

Gerald Shreiber

casual a XXXX to six growth, about which we markets year five and and the could that add it, with that restaurant ago, Just been we to on years dining good into not key only it with has growth comments or Bob's identified that got beyond. group thought and customers continue but we've we

there churros, opportunities for it. a looking we're of products, filled, pretzels broad kinds, lot spectrum a of all soft of of all So across our

Jon Anderson

is, initiative. from on the I and distribution and supply in seeing whether improvement dealing per industry, was the seeing comment with we've just you're or it in the the shortages, electric to you freight what that for quarters? been last know demand something But everyone's know logging several any for you cost I loosening the be be cost the grappling with think could in press perspective, Excellent out one we it are device called me any is this if release distribution market,

Gerald Shreiber

We're be how focusing to quarters. XX,XXX think for but were as But an challenge it months there nine our indeed we with aren't and to I - I bit secured that being read are costs. don't get of it article trucking increases for we a ago, solid it yesterday realize balls fast logistics year slowed as these increases us truckers a truck grappling at or as the be us they is with all up on and coming they a I currently. several took little and task metal least it going are a shortage numbers, our right. drivers these a to warehousing to that's know interesting would major that that permanently

going can by So us we we on and certain the that by to products sales help be that while. to being it and for the are do focusing be cost a logistics expect shifting the it we're there that, in to but produced, will fact our things trends challenges

Jon Anderson

forward. Okay, good lot luck thank going and a guys you. Thanks

Operator

go Our next question Please comes ahead. from Rafn. Brian

Brian Rafn

morning, Good guys. Gerry. morning, Good

Gerald Shreiber

are How you Brian?

Brian Rafn

it prices consumers resistance to of Good, I difference you - Gerry is lines lasted the to are of where guys appear the a What see and kind amongst getting to to might product want your question price lines? across margins skewed raise by ask it the on well different easier different for about. product? Where product do have you little tougher across you be

Gerald Shreiber

Well, and it's we along lines. want fairly the into meaning Dr. to compared the room to we our Pepsi's, that We Coke's, consider that a always of these in customer products weather But volume. and god, consumer Partly have to because brands, due be perhaps consideration and ICEE. resilient even is ICEE the think to they're Pepper's. all pretzels the to being core churros beverage got that's we pricing higher take going and lose the would

Fortunately a with for same to advance we're of we want time so pricing we the products, and us expect to position into the our our take we have in in major at but consideration, all pretty that brands good past more than

Brian Rafn

reducing discounts? talking Okay, pricing Gerry, advanced about volume you're price on are or maybe or couponing you talking quantitative you about when more a hike talking about that, are

Gerald Shreiber

pricing. talking We're about

Brian Rafn

They companies, a portions also me it have even with volume, and food play with you lot package they unit let play the you're very area. the you adamant. Okay, personal you seeing sizes, see per hygiene amongst been around What in very, container. guys, ask portion around guys of resistant

at stick for to product not always a that that? are guys are looking price, going forward, had wise to you you're have smaller a going You volume what making you

Gerald Shreiber

steps a pricing size pretzel, market anything customer XX We're stick we've not or by We're count. the an the cascade. ounce products market kind going of to developed specialty involved, it or bigger If a to that in or to count have be be increase traditional XXX to we're cut going and six of going pack back their so weight to our it to value count, some that.

Brian Rafn

States United you and see solid have benefit, hot –obviously neutral? you that's weather weather. summer, played Alright the would of US the with heat for out How summer's about you headwind they're How the or across this do guys, really across Gerry. leverage kind XXXX

Gerald Shreiber

weeks a we're the started to matter bit weather then it I'm in the some two weather approach weather going our past and sending what cool Well, like real have little good the to or people. no so. the that we'd and storm had the But we that's attitude

Brian Rafn

more or look Okay, when further maybe the Pretzel acquisitions on versus in at how something think you a been a acquisitions New has more Ray's? some recently back Swirl recent newer Daddy the of your Philly like performance York and little I

Gerald Shreiber

$XX company, in now. out and Well, Ray's ago, Daddy long-term we doing things Ray's million a that was a for Daddy on talked will million, it of long. XX million seven XX we facility when I When small now real solid there. performer focus bought that years plant do major

Swirl, was we're York ever. in acquired and having been and New Pretzel it England its unnatural that fit for few New York us Philly New year years we it's since into a best having, corridor but because it's

Brian Rafn

Okay, growth between area you or seeing you think private do battle brands more awesome. the the and are and national business? a to private in grocers label label Gerry you What

Gerald Shreiber

that. Bob you - about why reply don't It's Pape, to

Robert Pape

do a private partner we that with, well a to feel strategic as for develop as we balance are trying Yeah, label have customers offering. branded of

Gerald Shreiber

emphasis on the branded. But

Robert Pape

is have Heritage understanding the so as we branded a And company. that

Brian Rafn

go on grocery you it any lunches supply more Okay, lot sandwiches those racks? end concentration you're a for side or be and that. guys front to service the seeing Are speed pre-made might single in has quick met be to giving

Gerald Shreiber

into they daily Really at need go opportunities. in items are so to prep. hand have mind a not grocery our into we they Keep got frozen yeah, looked although couple the some gone if most and of per say,

Brian Rafn

anything on there? more sales, you, Got benefits store convenient that developing the products anything side

Gerald Shreiber

think team needle future. put Well, growing - move identified nicely our there's that to plenty convenient of concentrating it's is and we've room we for a that team business and store the a where on

Brian Rafn

has as of view one prep same we strategic whether sales due - kind company XX it's size, final sales kind all still dollar same XX. one a gotten sales you side? you regardless for bigger versus $XX Gerry then Are the point M&A, or say, on of on opportunities you've us hear lot your companies of million looking the the at diligence, buy a And

Gerald Shreiber

opportunities strategically with a Well, something we and but that incoming think range we're us that criteria or fit for they've that's looking that they add of just we're got again the the meet acquisitions, broad to not long-term. at can so value our looking at potential value, immediate but for

Brian Rafn

a do your kind you you radar, or Gerry, pitched potential to on get guys lot guys kind of thought of you of acquisitions? what for own deals difference

Gerald Shreiber

they're Well, at going to pitched week, consider got - a we and calling claim I you to couple to look behind of on get they're a and look their the behind few just you - us coming of when you're you numbers, deals calling times urgencies.

way reject we through more on. follow So than we what

Brian Rafn

guys. thanks you. we'll job, see you, Got Good

Operator

go Please comes Gallo. ahead. Michael Our next from question

Gerald Shreiber

morning, Michael. Good

Michael Gallo

morning. good Hi,

in past I see us I mentioned a up. quick update know you on expand opportunities the if restaurants, quarter. very follow you're perhaps was a wondering looking strong that. within Thanks. an quick service that to some that Just I you've can give at

Gerald Shreiber

next calendar come that into We'll update may an now you in next we prudish quarter year. give several things because and have be to the happening happy come

Michael Gallo

much. very Okay, thanks

Operator

further no call I'll Shreiber closing showing we're And back now for to turn Gerry remarks. the questions.

Gerald Shreiber

We be address never shareholders for call. happy months our that employees. third confident we and conference of from forward customers, three to improved doing are want in in everybody our look hopeful to participating will quarter be our to we Alright, our the there now benefit I'll any certainly and this operations and long-term moment. I'll but give I again them, the believe you for will questions, success a That thank If total change. and our are

Operator

And Rafn. a Brian question - a question line we go Please on up follow ahead. do have from

Brian Rafn

Yeah, one just got. more Gerry I've

corpus and you I'm the major you of with a had or type experience the your guys of - got market and problem balance of are sheet. those stay kind stick your you to a were great and on going You've with money some going the stuff with the were back size they that mass just liquidity for stock cash reserve, preferred with short-term going yield, higher to the looking from you security? corporate Are short-term whatever

Gerald Shreiber

We're comfortable our comfortable where our be I yield. with investments. excited cash think the a going of or yields with to but keep use focus or yielding We're Best on, operations. with is the but cash our about with results that we're our X.X, comfortable we'll we're yields composite not building of X.X, cash,

Brian Rafn

Gerry, thanks Alright, again.

Gerald Shreiber

there's more exit now. questions can if Alright, I no

Operator

questions. further no showing We're

Gerald Shreiber

continued Thank us. to you. And everybody's in I appreciate interest going I'm disengage.

Operator

Thank and may you you ladies now today's and for you gentlemen. participating This Thank conference. concludes disconnect.

Gerald Shreiber

Thank you.

Gerald Shreiber	Chief Executive Officer
Bob Pape	Senior Vice President
Gerard Law	Senior Vice President
Michael Gallo	CL King & Associates
Akshay Jagdale	Jefferies
Jon Andersen	William Blair & Company
Brian Rafn	Morgan Dempsey Capital Management

J&J Snack Foods (JJSF) 31 Jul 182018 Q3 Earnings call transcript